WORLD TRADE  
ORGANIZATION  G/SG/N/7/IND/2 
G/SG/N/8/IND/16 
G/SG/N/11/IND/3 
27 February 2009 
 (09-1017) 
Committee on Safeguards Original:   English 
  
 
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT 
ON SAFEGUARDS BEFORE TAKING A PROVISIONAL 
SAFEGUARD MEASURE REFERRED TO IN ARTICLE 6 
 
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE  
AGREEMENT ON SAFEGUARDS ON FINDING A SERIOUS INJURY  
OR THREAT THEREOF CAUSED BY INCREASED IMPORTS  
 
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2 
OF THE AGREEMENT ON SAFEGUARDS 
 
INDIA 
 
(Dimethoate Technical
) 
  
 The following communication, dated 20 February 2009, is being circulated at the request of 
the Delegation of India.    
_______________  
  
 We enclose a notification pursuant to Article 12.1(b) of the Agreement on Safeguards , on 
making a finding of serious injury or th reat thereof caused by increased imports;   notification pursuant 
to Article 12.4 of the Agreement on Safeguards , before taking provisional safeguard measures for 
imports of Dimethoate Technical (i ncorporating an offer of consulta tions under that Article);  and 
notification pursuant to Article 9, footnote 2 of the Agreement on Safeguards,  on action taken under 
paragraph 1 of Article 9.   G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 2 
  
  Notification under Article 12.1(b) and 12.4 of the agreement on safeguards
 
 
1. Specify the product subject to the proposed provisional safeguard measure 
 
 The product namely Dimethoate Technical  is classified under 38081026 of HSN and 
38089123 of Schedule I of the Customs Tariff Act, 1975.    
2. Specify the proposed safeguard measure 
 
 Ad valorem Safeguard Duty of 28 (twenty eight) per cent.  
 
3. Specify the proposed date of introduction of the provisional safeguard measure 
  The Directorate General of Safeguards has recommended for imposition of Safeguard Duty 
on 2 February 2009.  The approval of th e Central Government is awaited.   
 
4. Specify the expected duration of the provisional safeguard measure, if any decision on 
the duration of the measure has been made 
  Two hundred (200) days.   
 
5. Provide the basis for Making a preliminary determination, as provided for in Article 6, 
that increased imports have caused or are threatening to cause serious injury;  and determining that there are critical circumstances where delay would cause damage 
which it would be difficult to repair 
 The Directorate General of Safeguards carried out a study in response to the application 
submitted by the domestic industries in order to dete rmine whether there was serious injury to the 
domestic industry, within the meaning of the Ag reement on Safeguards, in connection with the 
product defined in point 1 of this notification.  The results of the study are recorded in the Notification 
dated 2 February 2009 and published in the O fficial Gazette of India on the same day.   
 
 The analysis shows that the application contains  sufficient evidence of serious injury to the 
domestic industry caused by imports, thereby meeting th e conditions laid down by the rules in force to 
implement possible provisional safeguard measures.    
 The above-mentioned conclusion is based  on the following considerations:   
  a) Increased Imports
:  There has been increasing trend in imports in absolute terms 
from the year 2005-06 except in 2006-07.  Taking base year as 2005-06, the import has decreased by 11 per cent in 2006-07, increased by 255 per cent in 2007-08 and 
further increased by 412 per cent in 2008-09 (April to Sept. 08).  The import figures 
year wise is mentioned below:    G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
 Page 3 
  
  Table-1
 
 
Year Quantity (in MT) Indexed 
2005-06 76 100 
2006-07 68 89.47 
2007-08 270 355.26 
2008-09  
(First 6 months) 389 511.84 
 
Similarly, share of imports in the domestic market has gone up from 8 per cent in 2005-06 to 25 per cent in 2007-08 & 51 per cent in 2008-09 (first half).  The detailed statistics is mentioned below:   
 
Table-2
 
 
   
 
 
 
 
 The imports of Dimethoate Technical have thus increased in absolute terms as well as compared to total domestic market.   
 
 b) Serious injury and Threat of serious injury
 
 
Sales:   The sales of the product under investiga tion has seen sudden and sharp decline during 
the year 2008-09 compared to the precedi ng year as well as the base year 2005-06, as 
apparent from the Table below.  The decline in average monthly sale in 2008-09 has been 
20.71 per cent compare to the preceding year i.e 2007-08.   
 
Table 
 
 Domestic sale by the 
applicant (MT) Average Monthly 
Sale 
(MT) Indexed 
2005-06 844 70.33 100 
2006-07 893 74.42 105.82 
2007-08 819 68.25 97.04 
2008-09 (first nine 
months) 487 54.11 76.94 
 
Market Share of domestic Industry:   Market share of domestic industry was 92 per cent 
during 2005-06.  It improved marginally to 93  per cent during 2006-07 but fell to 75 per cent 
during 2007-08.  In the first half of 2008- 09, market share of domestic industry saw 
significant fall to 51 per cent. The fall of shar e of domestic producers in market share is 
despite growing market.   
 Market share of 
Consumption 2005-06 2006-07 2007-08 2008-09 
(First half) 
Imports 8% 7% 24% 51% 
Domestic Industry 92% 93% 76% 49% G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 4 
  
  Table  
2008-09 
 
2005-06 2006-07 2007-08 (First 
half) 
Market share of Consumption  (Total sales in India) - - -  
Imports 8% 7% 25% 49% 
Domestic industry 92% 93% 75% 51% 
 
Production:   The average monthly production of the product under investigation by the 
domestic industry has seen decline of 14.65 per cent during the first half of 2008-09 
compared to 2007-08.  There has been improvement in production in 2006-07 over 2005-06 but it continued to decline thereafter.   
 
Table  
2008-09 
Year 2005-06 2006-07 2007-08 (First Half) 
Domestic production (MT) 829 906 860 367 
Average Monthly 
Production(MT) 69.08 75.5 71.67 61.17 
 
Capacity Utilization:   The capacity utilization of the domestic industry was mere 18 per cent 
during the third quarter of the financial year  2008-09.  The capacity utilization had improved 
in 2006-07 compared to 2005-06, but the utilizat ion decreased continuously.  The fall in 
2008-09 (Apr-Dec) had brought the capacity utilization to 59 per cent.    
 
 
2005-06 2006-07 2007-08 2008-09 
(Apr-Dec) 2008-09 
(last three 
months) 
Capacity Utilization (%) 83 91 86 59 18 
 
 
Productivity:   The preliminary investigation shows no indication to suggest that the injury is 
on account of loss of productivity.   
 
Profitability:   The applicant was running in profit till 2007-2008, however in 2008-2009 in 
first nine months the applicant has incurred a lo ss of Rs 65.34 (Index) taking profit of Rs. 100 
(index) in the year 2007-08.   
 
Employment:  The domestic industry has been shut down intermittently from 
23 September 2008 for want of demand and it is closed since 13 January 2009.  This closure 
has turned 102 employees idle.   
  c) Causal link between increased import and serious injury or threat of serious 
injury :  The period when economic indicators show serious injury coincide with the 
period of increasing imports in absolute as well as relative terms.  The fall in sales and market share during 2008-09 (first half) and 2007-08 compared to 2006-07  G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
 Page 5 
  
  coincide with the increase in imports during the same period. Similarly, fall in 
production and capacity utilization during 2008-09 (first half) and 2007-08 compared to 2006-07 coincide with the increase in imports during the same period.  
Accordingly, the preliminary determination s hows that the serious injury and threat of 
serious injury is attributable to the increased import.   
  d) Adjustment plan
:  The domestic producer has subm itted detailed adjustment plan to 
cut cost, which includes Use of waste h eavy oil and organic layer as fuel, Power 
saving by modernizing electrical equipments , Use of better manufacturing practices, 
Improvement in management practices, Reduction of administrative expenses, Effective Inventory Management.  The prelim inary determination shows that the plan 
is viable.   
 
 e) Critical Circumstances
:  The market share of domestic industries has fallen from 
93 per cent in 2006-07 to 51 per cent in 2008-09.  The capacity utilization reduced to 18% during Oct-Dec, 2008 and the unit is closed rendering employees idle.  The 
domestic industry is making losses incapacita ting him to restart the operation and 
regain market share, if immediate safeguard  measures are not taken.  Accordingly, the 
preliminary determination shows that criti cal circumstances exist in which delay in 
imposing provisional safeguard duty would cause damage which it would be difficult 
to repair.   
  In view of the above, critical circumstanc es exist justifying imposition of provisional 
safeguard duties immediately in order to save the domestic producers from dama ge which it would be 
difficult to repair if the application of safeguard measure is delayed.   
 
6. Offer of consultations under Article 12.4 
 The Government of India offers consultati ons on the provisional safeguard measures at any 
time after February 2nd, 2009.    7. Other information 
 The notification on the recommendation of th e provisional safeguard measure was published 
in the Official Gazette of 7.   G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 6 
  
  N
OTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, ON THE NON-APPLICATION OF SAFEGUARD 
MEASURE TO DEVELOPING COUNTRIES UNDER ARTICLE 9.1 
  
1. Specification of the measure 
 
 The proposed provisional safeguard measure c onsists of a 28 per cent Safeguard duty to be 
paid on imports of Dimethoate Technical cl assified under 38081026 of HSN and 38089123 of 
Schedule I of the Customs Tariff Act, 1975.   
 
2. Product subject to the measure 
 
 The proposed measure applies to Dimethoate  Technical classified under 38081026 of HSN 
and 38089123 of Schedule I of the Customs Tariff Act, 1975.   
 
3. Developing countries to which the measur e is not applied under Article 9.1 of the 
Agreement on Safeguards, and the import shares of these countries individually and collectively 
 
Imports of the products concerned originating in  any of the developing countries specified in 
Annex 1 shall not be subject to the provisional safeguard measures, except in the case of those 
products originating in those countries against whic h "Shall Apply" appears in column 4 of that 
annex 1.   G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
 Page 7 
  
  ANNEXURE 1 
 
List of developing countries to which the pr ovisional measures apply or do not apply: 
 
 
Col.1 Col.2 Col.3 Col.4 
Sl.No Name of Developing Country % of 
Imports Whether 
Applies or not 
1 Afghanistan Negligible Not Apply 
2 Algeria Negligible Not Apply 
3 Angola Negligible Not Apply 
4 Antigua and Barbuda Negligible Not Apply 
5 Argentina Negligible Not Apply 
6 Bahamas Negligible Not Apply 
7 Bahrain Negligible Not Apply 
8 Bangladesh Negligible Not Apply 
9 Barbados Negligible Not Apply 
10 Belize Negligible Not Apply 
11 Benin Negligible Not Apply 
12 Bhutan Negligible Not Apply 
13 Bolivia Negligible Not Apply 
14 Bosnia and Herzegovina Negligible Not Apply 
15 Botswana Negligible Not Apply 
16 Brazil Negligible Not Apply 
17 Brunei Darussalam Negligible Not Apply 
18 Burkina Faso Negligible Not Apply 
19 Burundi Negligible Not Apply 
20 Cambodia Negligible Not Apply 
21 Cameroon Negligible Not Apply 
22 Cape Verde Negligible Not Apply 
23 Central African Republic Negligible Not Apply 
24 Chad Negligible Not Apply 
25 Chile Negligible Not Apply 
26 China 51% Shall Apply 
27 Colombia Negligible Not Apply 
28 Comoros Negligible Not Apply 
29 Congo Negligible Not Apply 
30 Costa Rica Negligible Not Apply 
31 Coste d' lvoire Negligible Not Apply 
32 Cuba Negligible Not Apply 
33 Cyprus Negligible Not Apply 
34 Democratic People's Republic of Korea Negligible Not Apply 
35 Democratic Republic of the Congo Negligible Not Apply 
36 Djibouti Negligible Not Apply 
37 Dominica Negligible Not Apply 
38 Dominican Republic Negligible Not Apply 
39 Ecuador Negligible Not Apply 
40 Egypt Negligible Not Apply G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 8 
  
  Col.1 Col.2 Col.3 Col.4 
Sl.No Name of Developing Country % of 
Imports Whether 
Applies or not 
41 El Salvador Negligible Not Apply 
42 Equatorial Guinea Negligible Not Apply 
43 Eritrea Negligible Not Apply 
44 Ethiopia Negligible Not Apply 
45 Fiji Negligible Not Apply 
46 Gabon Negligible Not Apply 
47 Gambia Negligible Not Apply 
48 Ghana Negligible Not Apply 
49 Grenada Negligible Not Apply 
50 Guatemala Negligible Not Apply 
51 Guinea Negligible Not Apply 
52 Guinea-Bissau Negligible Not Apply 
53 Guyana Negligible Not Apply 
54 Haiti Negligible Not Apply 
55 Honduras Negligible Not Apply 
56 Indonesia Negligible Not Apply 
57 Iran (Islamic Republic of) Negligible Not Apply 
58 Iraq Negligible Not Apply 
59 Jamaica Negligible Not Apply 
60 Jordan Negligible Not Apply 
61 Kenya Negligible Not Apply 
62 Kiribati Negligible Not Apply 
63 Kuwait Negligible Not Apply 
64 Lao People's Democratic Republic Negligible Not Apply 
65 Lebanon Negligible Not Apply 
66 Lesotho Negligible Not Apply 
67 Liberia Negligible Not Apply 
68 Libyan Arab Jamshiriya Negligible Not Apply 
69 Madagascar Negligible Not Apply 
70 Malawi Negligible Not Apply 
71 Malaysia Negligible Not Apply 
72 Maldives Negligible Not Apply 
73 Mali Negligible Not Apply 
74 Malta Negligible Not Apply 
75 Marshall Islands Negligible Not Apply 
76 Mauritania Negligible Not Apply 
77 Mauritius Negligible Not Apply 
78 Micronesia Negligible Not Apply 
79 Mongolia Negligible Not Apply 
80 Morocco Negligible Not Apply 
81 Mozambique Negligible Not Apply 
82 Myanmar Negligible Not Apply 
83 Namibia Negligible Not Apply 
84 Nepal Negligible Not Apply 
85 Nicaragua Negligible Not Apply  G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
 Page 9 
  
  Col.1 Col.2 Col.3 Col.4 
Sl.No Name of Developing Country % of 
Imports Whether 
Applies or not 
86 Niger Negligible Not Apply 
87 Nigeria Negligible Not Apply 
88 Oman Negligible Not Apply 
89 Pakistan Negligible Not Apply 
90 Palestine Negligible Not Apply 
91 Panama Negligible Not Apply 
92 Papua New Guinea Negligible Not Apply 
93 Paraguay Negligible Not Apply 
94 Peru Negligible Not Apply 
95 Philippines Negligible Not Apply 
96 Qatar Negligible Not Apply 
97 Romania Negligible Not Apply 
98 Rwanda Negligible Not Apply 
99 St. Kitts and Nevis Negligible Not Apply 
100 St. Lucia Negligible Not Apply 
101 St. Vincent and the Grenadines Negligible Not Apply 
102 Samoa Negligible Not Apply 
103 Sao Tomo and Principe Negligible Not Apply 
104 Saudi Arabia Negligible NotApply 
105 Senegal Negligible Not Apply 
106 Seychelles Negligible Not Apply 
107 Sierra Leone Negligible Not Apply 
108 Singapore Negligible Not Apply 
109 Solomon Islands Negligible Not Apply 
110 Somalia Negligible Not Apply 
111 South Africa Negligible Not Apply 
112 Sri Lanka Negligible Not Apply 
113 Sudan Negligible Not Apply 
114 Suriname Negligible Not Apply 
115 Swaziland Negligible Not Apply 
116 Syrian Arab Republic Negligible Not Apply 
117 Thailand Negligible Not Apply 
118 Togo Negligible Not Apply 
119 Tonga Negligible Not Apply 
120 Trinidad and Tobago Negligible Not Apply 
121 Tunisia Negligible Not Apply 
122 Turkmenistan Negligible Not Apply 
123 Tuvalu Negligible Not Apply 
124 Uganda Negligible Not Apply 
125 United Arab Emirates Negligible Not Apply 
126 United Republic of Tanzania Negligible Not Apply 
127 Uruguay Negligible Not Apply 
128 Vanuatu Negligible Not Apply 
129 Venezuela Negligible Not Apply 
130 Vietnam Negligible Not Apply G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 10 
  
  Col.1 Col.2 Col.3 Col.4 
Sl.No Name of Developing Country % of 
Imports Whether 
Applies or not 
131 Yemen Negligible Not Apply 
132 Yugoslavia Negligible Not Apply 
133 Zambia Negligible Not Apply 
134 Zimbabwe Negligible Not Apply 
135 Mexico Negligible Not Apply  G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
 Page 11 
  
  Director General (Safeguards) 
 
NOTIFICATION
 
 
(New Delhi, the 2 February 2009 F.NO. D-22011/07/2009) 
 Subject :  Safeguard investigation concerning imports of Dimethoate technical – 
Preliminary findings. 
 
 - Having regard to the Custom Tariff Act, 1975 and the Custom Tariff (Identification and Assessment of Safe guard duty) Rules, 1997 thereof.   
 1. The notice of initiation of safeguards inves tigation concerning imports of Diamethoate 
technical into India was issued on 21 January 200 9 and was published in the Gazette of India, 
Extraordinary on the same day.  A copy of the notice was also sent to all known interested parties as 
under:   
 
 Domestic Producers  
  M/s Shivalik Rasayan Limited, 1506, Chir anjivi Tower, 43, NehruPlace, New Delhi –
 110019.  
 Importers and Users
 
 
a) M/s Rallis India Ltd., Apeejay House, 7th Floor, 3 Dinsha Vachha Road, Mumbai – 400033. 
b) M/s Anu Products Ltd, Tigoan Road, Faridabad, Haryana. 
c) M/s Hyderabad Chemicals Ltd., A-24/25, APIE , Bala Nagar, Hyderabad – 500037 (A.P.). 
d) M/s Insecticides (India) Ltd., 401-402, Lusa Tower, Azadpur Commercial Complex, Delhi – 
110033. 
e) M/s Atul Pesticides Pvt. Ltd., M-9,10,11, Gupta Tower, Azadpur Commercial Complex, 
Delhi – 110033. 
f) M/s Jai Shree Rasayan Udyog Ltd., M-4, Ara dhana Bhawan, Azadpur Commercial Complex, 
Delhi – 110033. 
g) M/s Isagro (Asia) Agro Chemicals Pvt. Ltd ., 101, Solitare Corporate Park, 151, M. Vasanji 
Road, Chakala, Andheri (East), Mumbai – 400093. 
h) M/s Hindustan Pulverising mills, 209-210, A nupam Bhawan, Azadpur Commercial Complex, 
Delhi – 110033. 
i) M/s Boss Agro Chemicals, 108 Chetak Centre, 12/2, RNT Marg, Indore – 452001 (M.P.). 
 
 Associations  
 
 Pesticide Manufacturers and Formulators Asso ciation of India (PMFAI), D-516, Crystal 
Plaza, Andheri Link Road, Andheri (West), Mumbai – 400053.  
 Exporters
 
 
a) Chongqing Min-Feng Agrochem Co.Ltd. 
Jingkou, Shapingba, Chongqing,  China. 
 G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 12 
  
  b) Jiangsu Tenglong Group 
No.1, Chengxiang(N) Road, Xituan Town, Dafeng City, 
Jiangsu 224 124 
China. 
 2. A copy of the notice was also sent to Government s of exporting countries through their Embassies 
in New Delhi. 
3. Questionnaires were also sent, on the same day,  to all known domestic producers, exporters and 
importers and they were asked to submit their response within 30 days. 
4. The domestic industry has submitted the respon se to the questionnaire along with additional 
submissions. 
5. All non confidential versions of the application,  response and additional submissions have been 
kept in the Public Folder. 
 
6. View of the Domestic Industry
 
 
a) The Domestic producer M/s Shivalik Rasaya n Ltd, who account for 100% of the domestic 
production of Dimethoate Technical ha ve made the following major points- 
 
I. The product is Dimethoate Technical falli ng under 8 digit code 38081026 of harmonized 
system of nomenclature and 38089123 of the First Schedule to the Custom Tariff Act, 1975 (CTA). 
II. The product comes in various concentrati ons. The most common concentration ranges 
between 85 to 98%. The product of various con centrations can be used interchangeably as 
in insecticide formulations the required concentr ation of Dimethoate Technical is less than 
40%. In India the formulations  are being sold in 30% concentration of Dimethoate Technical.  
III. Imports into India have increased from 68 MT during 2006-07 to 270 MT during 2007-08. 
Moreover, during the first six months of 2008- 09, 389 MT have already been imported into 
India. At this rate, total imports during the full year 2008-09 (estimate) would be 780 MT- 
recording an increase of over 190% in a single year. 
IV. Custom duty upon importation of Dimathoate Technical into India has come down from 20% 
in 2004-05 to 10% in 2008- 09 exposing domestic industry to  international competition. 
V. Market share of imports was 8% during 2005- 06. It went down marginally to 7% during 
2006-07 but regained back substantially to 25% during 2007-08. In the first half of 2008-09, 
market share of imports increased to 51% and it is estimated to go upto 60% for complete financial year 2008-09. From a high market share of 92 % in 2006-07, share of domestic production would come down to a mere 40% in 2008-09 – recording a fall of over 52%. 
VI. The sudden increase in imports and consequent injury to domestic industry is on account of 
predatory business practices of exporting c ountry which is definitely an unforeseen 
development which Indian nego tiators could not foresee while negotiating the agreements. 
The basic raw material for Dimethoate Techni cal is P2S5 which is manufactured out of 
yellow phosphorous. China has got huge reser ves of yellow phosphorous and in a way 
controls its trade. To kill all phosphorous b ased industries in oversees Market, and to capture 
phosphorous based Market in overseas countries including India, china started following 
predatory trade practices where, China in a calcu lated manner artificially increased the cost of 
base raw material i.e. yellow phosphorous for overseas player by imposing heavy export duty as high as 120% and at the same time for its dom estic producers ensured its availability at a 
cheaper price. On account of this trade pr actice, the cost of production of Dimethoate 
Technical for domestic producer in India is ve ry high compared to cost of production of  G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
 Page 13 
  
  Chinese manufacturer and thus in this scenar io Indian manufacturer cannot compete with 
Chinese manufacturer. On account of predatory trade practices of PR China, the price of yellow phosphorous has gone up from USD 900 to USD 9000 i.e. ten times in a short span of 
just 4 years. The applicant as an  evidence of imposition of Export duty to the tune of 120% on 
yellow phosphorous by china and 10 times increase in price of yellow phosphorous on account of predatory trade practices of exporting country submits an article titled 
"Phosphorous based products to cost more" appearing in Economic Times Mumbai Edition on Jun 12, 2008 at Page: 17 in the Economy Secti on. The current rate of export duty on yellow 
phosphorous imposed by PR China is learnt to be 70%. 
VII. Normally commodity taxes are destination based  consumption taxes and in general there are 
no taxes levied by the exporting country in resp ect of most of the commodities. This kind of 
taxation and that too by 120% by an exportin g country  was unexpected and unforeseen by 
Indian negotiators in GATT to perceive a s ituation where a country will adopting such a 
predatory trade practice , when member nati ons are negotiating to ensure free and fair 
international trade. 
VIII. Further the unprecedented and uneven recession has destabilized domestic industries of 
various nations including th e nations who had very high production capacities. With 
unexpected fall in demand worldwide on account of recession, the situation of producers in India is even graver. The imposition of export dut y on basic raw material from which users in 
exporting country are immune, accompanied with encouragement of export of derivatives of 
phosphorous at prices lower than the cost of sale by the domestic industry in India is the 
strategy of exporting nations to capture the dom estic market of India, by making the domestic 
producers completely unviable. 
IX. On account of above unforeseen developments, Imports into India have increased from 68 
MT during 2006-07 to 270 MT during 2007-08.  Moreover, during the first six months of 
2008-09, 390 MTs have already been imported into India.  At this rate, total imports during 
the full year 2008-09 would be 780 MT – reco rding an increase of over 190% in a single year. 
X. This unforeseen development has led to incr ease in imports. The 120% export duty on yellow 
phosphorous was imposed in the beginning of 2008-2009, as a result the share of imports in first half of 2008-2009 went up to 51 % from its  share of 24% in 2007-08. This increase in 
import has led to serious injury to domestic  producer which is evident from parameters 
mentioned in annexure of Customs Tariff (Identif ication and Assessment of Safeguard Duty) 
Rules, 1997. share of domestic production has g one down to 49% in first half of 2008-2009 
compared to 93% in 2006-2007, whereas imports share has gone up from 7% to 51% in the same time span.  
a) Share of domestic sales has gone down to 51% in first half of 2008-2009 compared to 
93% in 2006-2007, whereas imports sales share has gone up from 7% to 49% in the same time span.  
b) The productivity of machines and capacity of plant remained same and the injury is 
not attributable to production capability of the plant.  
c) However on account of idling of capacity, th e productivity in relation to number of 
employees has gone down to 481 kg per employee per month compared to 702 kg per 
employee per month in 2007-2008. 
d) The capacity utilization of the plant has gone down to 59% in first nine months of 
2008-2009 compared to 86% of 2007-2008 and 91% of 2006-2007. G/SG/N/7/IND/2 
G/SG/N/8/IND/16 G/SG/N/11/IND/3 
Page 14 
  
   
e) The applicant was running in profit till 2007-2008, however in 2008-2009 in first 
nine months the applicant has incurred a loss of Rs 16.27 lakhs. The situation has 
become worse in third quarter of 2008-2009, in which the losses are to the tune of 
Rs.30.82 lakhs and thus serious injury h as become severe in third quarter of 2008-
2009.  
f) The SRL employs 102 people who have become idle on account of closure of plant. 
XI. The unforeseen development has caused increased in imports and increased in imports has 
caused serious injury. There is no other factor  which has perceptible bearing on the serious 
injury /threat of serious injury faced by the domestic producer. 
XII. The applicant submits that the imposition of safeguard duty on Dimethoate technical will 
actually serve the public interest and in no way cause the hardship to public at large as 
apparent from points mentioned below: The unf oreseen developments had led to increased 
imports which have caused serious injury and the share of imported goods have gone to 51% 
in the first half of 2008-2009 from a mere 7 % in 2006-07. If protection measures are not 
taken, the sole domestic producer, whose plant is  already closed in absence of orders, will not 
be able to resume production. In this scenario  the Indian Dimethoate based insecticides trade 
will become 100% dependent on foreign supp lies. After complete wiping of domestic 
production facilities, the foreign supplier will charge prices of their choice and thus will 
exploit Indian market. The 100% control of foreign players on   Dimethoate based 
insecticides trade in India is really not in pub lic interest. Therefore it is really in public 
interest that protection measures are taken to save domestic producer.  
XIII. The imposition of safeguard duty shall not affect the ultimate consumers in India at all. At 
present the public at large is not benefited by  cheaper imports. Isagro Agrochemicals Ltd. as 
well as Rallis India Ltd both produces insectic ides with brand name Rogor with 30% 
Dimethoate as its active ingredient. Isagro pr oduces Rogor with 100 % of their Dimethoate 
procured from applicant i.e. indigenous sources and with no content of  imported Dimethoate 
Technical and sell in the market at a current MRP of Rs. 280/- per litre. Whereas the Rallis 
India Ltd with maximum importe d Dimethoate content sells R ogor at a current MRP of Rs. 
342/- per litre. Therefore for the farmers, Rogor made from domestic Dimethoate Technical is 
actually cheaper compared to Rogor made  from imported Dimethoate Technical. The 
safeguard duties on imported Dimethoate technical will not have any effect on the price of Rogor made from domestic Dimet hoate technical and this will be  still available at Rs 280/litre 
if there are no changes in other factors. The applicant has submitted the price list of these 
companies along with Rogor samples of these companies showing above MRPs. 
XIV. The Phosphorous Pentasulphide (P2S5) is b asic raw material to produce Dimethoate 
Technical which constitutes about 72% of its ra w material cost and roughly 50% of total 
production Cost. P2S5 is a derivative of yello w phosphorus which is being controlled by 
China. China has virtually made rest of th e world a hostage in Yellow Phosphorus needs by 
charging export duty as high as 120% to disturb various producers of Organophosphate Chemicals. Under the circumstances the only scope left is in respect of this part of cost. 
Accordingly SRL proposes to adopt an appropria te strategy to improve upon efficiency in 
respect of other raw materials which will bring cost effectiveness and enable the company to 
compete with the international players. SRL pl ans to execute a number of adjustment plans 
that would take at least three years to implement. SRL shall be taking following measurers among others.    G/SG/N/7/IND/2 
 G/SG/N/8/IND/16 
 G/SG/N/11/IND/3 
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a) Use of waste heavy oil and organic layer as fuel, 
b) Power saving by modernizing electrical equipments,  
c) Use of better manufacturing practices,   
d) Improvement in management practices, 
e) Reduction of administrative expenses, 
f) Effective Inventory Management.  
 7. Findings of D.G.
 
 
a) The issue to impose immediate safeguard measures was examined. It has been found that a 
total of 168 Safegurad Initiations have been reported to the WTO during the period between 
29.03.1995 and 12.11.2008. It has been ob served that in 15 of these cases provisional 
safeguard measures have been recommended/ imposed within 30 days of initiation of the 
safeguard investigation. In some cases the provisional safeguard measures have been recommended on the same day as the date of initia tion of the investigation. The Rule 9 of 
Customs Tariff (Identification And Assessment of Safeguard Duty) Rules, 1997 notified vide 
Notification No. 35/97-NT-Customs dated 29.07.1997 prescribes that the Director General shall proceed expeditiously with the conduct of th e investigation and in critical circumstances, 
he may record a preliminary finding regarding serious injury or threat of serious injury. The 
principles governing investigations have been provided in the Rule 6 of the Customs Tariff 
(Identification and Assessment of Safeguard Duty ) Rules, which is independent to Rule 9. 
The Rule 15 of the Customs Tariff (Identifica tion And Assessment of Safeguard Duty) Rules 
provide for refund of differential Safeguard  duty in case safeguard duty imposed after 
conclusions of the investigations is lower than the provisional duty already imposed and 
collected. The harmonious reading of Rules 6,9 a nd 15 of the said Rules leads to a conclusion 
that the Rules provide for expeditious reco mmendation of provisional Safeguard duty based 
on preliminary findings and refund of the differential duty in case it is ascertained that the duty imposed after conclusion of investigation following natural justice as enshrined in the 
Rule 6 is lower than the provisional Safegurad Duty. However, in criti cal circumstances any 
delay in imposition of provisional Safeguard  duty may cause damage which would be 
difficult to repair. Accordingly, it was consid ered prudent to analy ze circumstances to assess 
whether the same falls in the category of critical circumstances. 
b) The product under investigation
 – Dimethoate Technical into India.  Dimethoate Technical 
is classified under sub-heading No. 38089123 of  Schedule I of the Customs Tariff Act 1975. 
It is commonly known as Dimethoate in in ternational literatures as per the guidelines of 
International Organization for Standardization.  The product comes in various concentrations. 
The most common concentration ranges between 85 to 98%. The product of various concentrations can be used interchangeably. Dimethoate is a widely used organophosphate 
insecticide used to kill insects on contact. It is an anticholinesterase which disables 
cholinesterase, an enzyme essential for central nervous system function.  
c) Domestic Industry  
 - M/s Shivalik Rasayan Ltd. account for 100% of domestic production in 
India. Accordingly, the applicants constitute  domestic industry in terms of clause (b) of 
subsection (6) of Section 8B of the Customs Tariff Act, 1975. 
d) Unforeseen Developments:  The Article XIX of GATT 1994 which reads as: 
" 1.         (a)            If, as a result of unforeseen developments and of the effect of the 
obligations incurred by a contracting party under this Agreement,……….." uses the term 
'unforeseen developments'. The use of plural te rm 'developments' implies that there could be 
more than one development whose combined eff ect may be considered. Further, in practice 
all developments may not be i ndependent and in fact such de velopments may influence each 
other. It is the effect of resonance of a ll such developments which impact the business G/SG/N/7/IND/2 
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  dynamics and tilt the odds from one to another. Therefore, in order to consider unforeseen 
developments and the result thereof, it is necessary to take holistic view. The basic raw material for Dimethoate Techni cal is P2S5 which is manufactured out of 
yellow phosphorous. The main exporting nation i. e People's Republic of China (China) has 
significant reserve of yellow phosphorous and has capability to influence the trade of yellow 
phosphorous based products. China increased the cost of base raw material i.e. yellow 
phosphorous for users including manufacturer users of countries other than that of China by 
imposing heavy export duty of 120% . On account of this trade practice, the cost of production 
of Dimethoate Technical for domestic producer in India is very high compared to cost of 
production of manufacturer in China On account of this, the price of yellow phosphorous has 
gone up many times. The current rate of export duty on yellow phosphorous imposed by PR China is 70% . Normally, commodity taxes are destination based consumption taxes and in 
general there are no taxes levied by the expor ting country in respect of most of the 
commodities. This kind of taxation and that too by 120% by an exporting country  is 
unexpected . Further the unprecedented and une ven recession has destabilized domestic 
industries of various nations including the na tions who had very hi gh production capacities. 
With unexpected fall in demand worldwide on account of recession, coupled with the 
imposition of export duty on basic raw material from which users in exporting country are immune are unexpected, unforeseen developments. 
 
e) Increased Imports 
- There has been increasing trend in  imports in absolute terms from 
the year 2005-06 except in 2006-07. Taking base year as 2005-06, the import has decreased by 11% in 2006-07, increased by 255% in 2007-08 and further increased by 412% in 2008-09 
(April to Sept. 08). The import figures year wise is mentioned below:  
 
Table-1
 
 
Year  Quantity 
(in MT)  Indexed
2005-06  76 100 
2006-07  68 89.47 
2007-08  270 355.26 
2008-09 
(First 6 
months)  389 511.84 
 
Similarly, share of imports in the domestic ma rket has gone up from 8% in 2005-06 to 25% in 
2007-08 & 51% in 2008-09 (first half). The detailed statistics is mentioned below:  G/SG/N/7/IND/2 
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Table-2
 
 
Market share of 
Consumption  2005-
06 2006-
07 2007-
08 2008-09  
(First 
half) 
Imports  8% 7% 24% 51% 
Domestic Industry  92% 93% 76% 49% 
 
The imports of Dimethoate Technical have thus increased in absolute terms as well as 
compared to total domestic market. 
 
f) Serious injury and Threat of serious injury  – 
Sales:  The sales of the product under investigati on has seen sudden and sharp decline during 
the year 2008-09 compared to the preceding y ear  as well as the base year 2005-06, as 
apparent from the Table below. The decline in average monthly sale in 2008-09 has been 
20.71% compare to the preceding year i.e 2007-08.   
Table: 
 Domestic sale by the 
applicant (MT)  Average Monthly 
Sale (MT)  Indexed  
2005-06  844 70.33  100 
2006-07  893 74.42  105.82  
2007-08  819 68.25  97.04  
2008-09 
(first nine 
months)  487 54.11  76.94  
 Market Share of domestic Industry:  Market share of domestic industry was 92% during 
2005-06.  It improved marginally to 93% during 2006-07 but fell to 75% during 2007-08.  In the first half of 2008-09, market share of dom estic industry saw significant fall to 51%.The 
fall of share of domestic producers in market share is despite growing market. 
 
Table 
 
2008-09
 
  2005-06  2006-07  2007-08  
(First half)  
Market share of 
Consumption  
(Total sales in India)  - - -  
    Imports  8% 7% 25% 49% 
    Domestic industry  92% 93% 75% 51% 
 
Production:  The average monthly production of the product under investigation by the 
domestic industry has seen decline of 14.65% dur ing the first half of 2008-09 compared to 
2007-08. There has been improvement in production in 2006-07 over 2005-06 but it continued to decline thereafter. G/SG/N/7/IND/2 
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  Table 
 
2008-09
 Year  2005-06  2006-07  2007-08  (First Half)  
Domestic production 
(MT)  829 906 860 367 
Average Monthly 
Production(MT)  69.08  75.5 71.67  61.17  
 
Capacity Utilization:  The capacity utilization of the dom estic industry was mere 18% during 
the third quarter of the financial year 2008-09.  The capacity utilization had improved in 2006-
07 compared to 2005-06, but the utilization decr eased continuously. The fall in 2008-09 (Apr-
Dec) had brought the capacity utilization to 59%.   
 
 2005-06  2006-07  2007-08  2008-09 
(Apr-Dec)  2008-09 
(last three 
months)  
Capacity Utilization (%)
 83 91 86 59 18 
 
PRODUCTIVITY :  THE PRELIMINARY INVESTIGATION SHOW S NO INDICATION TO SUGGEST 
THAT THE INJURY IS ON ACCOUNT OF LOSS OF PRODUCTIVITY . 
Profitability:  The applicant was running in profit till 2007-2008, howev er in 2008-2009 in 
first nine months the applicant has incurred a lo ss of Rs 65.34 (Index) taking profit of Rs. 100 
(index) in the year 2007-08.  
 
Employment:  The domestic industry has been shut down intermittently from 23.9.2008 for 
want of demand and it is closed since 13.1.20 09. This closure has turned 102 employees idle. 
 
g) Causal link between increased import and serious injury or threat of serious injury  –The 
period when economic indicators show serious injury coincide with the period of increasing imports in absolute as well as relative terms. The fall in sales and market share during 2008-
09 (first half) and 2007-08 compared to 2006-07 coin cide with the increase in imports during 
the same period. Similarly, fall in producti on and capacity utilization during 2008-09 (first 
half) and 2007-08 compared to 2006-07 coincide  with the increase in imports during the same 
period. Accordingly, the preliminary determinati on shows that the serious injury and threat of 
serious injury is attributable to the increased import.  
 
h) Adjustment plan
 – The domestic producer has submitted detailed adjustment plan to cut 
cost, which includes Use of waste heavy oil and organic layer as fuel, Power saving by 
modernizing electrical equipments, Use of be tter manufacturing practices,  Improvement in 
management practices, Reduction of admini strative expenses, Effective Inventory 
Management. The preliminary determina tion shows that the plan is viable. 
 
i) Critical Circumstances:  The market share of domestic industries has fallen from 93% in 
2006-07 to 51% in 2008-09. The capacity utiliza tion reduced to 18% during Oct-Dec, 2008 
and the unit is closed rendering employees id le. The domestic industry is making losses 
incapacitating him to restart the operation and re gain market share, if immediate safeguard 
measures are not taken. Accordingly, The pr eliminary determination shows that critical  G/SG/N/7/IND/2 
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  circumstances exist in which delay in im posing provisional safeguard duty would cause 
damage which it would be difficult to repair. 
 
j) Other Issues: 
The applicant submits that the imposi tion of safeguard duty on Dimethoate 
Technical will actually serve the public interest and in no way cause the hardship to public at 
large as it is the only surviving industry and survival of the domestic industry would help maintain competition to provide Dimethoate  Technical to Indian Dimethoate based 
insecticides manufacturers at competitive and fair prices. It has been further submitted that 
the manufacturer using domestic Dimethoate Technical is able to sell the insecticide 
formulations at lower MRP to consumers than  the manufacturer using imported Dimethoate 
Technical at lower landed value. 
During preliminary investigation the impact of safeguard duty on the ultimate 
consumer was studied. M/s  ISAGRO ASIA who is one of the main buyers of the domestic 
producer formulates  "ROGOR Dimethoate 30% EC" out of solely domestically produced 
Dimethoate Technical . On the other hand M/s Rallies India Ltd, Mumbai formulates "ROGOR Dimethoate 30% EC" out of imported Dimethoate Technical as well. The samples 
collected on market survey shows that th e MRP of the "ROGOR Dimethoate 30% EC" 
manufactured by ISAGRO ASIA is lower than  the identical product "ROGOR Dimethoate 
30% EC" produced by M/s Rallies India Ltd, Mumbai. 
 The safeguard duty is likely to increase the landed value of the imported product 
only. The safeguard duty intends to make th e competition fair even for those who need 
adjustment to deal with the in jury caused by increased imports. Accordingly, I find that the 
safeguard duty imposed on Dimethoate Techni cal alone may not have any bearing on the 
price paid by the ultimate consumers of insecticide (Dimethoate 30%). 
 
k) Developing Nations:
 The import of the product from China, which is a developing nation, is 
more than 50%. Imports from other developing  nations are insignificant. Accordingly, 
imports of Dimethoate Technical from all deve loping nations as notified vide Notification No. 
103/98-Cus dated 14.12.1998 (as amended) ex cept China may not attract safeguard duty. 
 
l) Conclusion and Recommendation : On the basis of the above preliminary findings it is seen 
that increased imports of Dimethoate Techni cal have caused serious injury to domestic 
producers of Dimethoate Technical. There exist critical circumstances, where any delay in application for safeguard measures would cause da mage which it would be difficult to repair, 
necessitating immediate application of provisional safeguard duty for a period of 200 days, 
pending a final determination of serious injury a nd threat of serious injury.  Considering the 
average cost of production of Dimethoate Tec hnical by the domestic producers (confidential), 
a reasonable return on capital employed, the present level of import duties and the average 
import prices of Dimethoate Technical, safegua rd duty at the rate of 28% (Twenty Eight 
Percent) ad-valorem, which is considered to be  the minimum required to protect the interest 
of domestic industry, is recommended to be imposed on imports of Dimethoate Technical 
classified under sub-heading No. 38089123 of Sc hedule I of the Customs Tariff Act 1975 into 
India. 
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  I. FURTHER PROCESS 
A. A
 PUBLIC HEARING WILL BE HELD IN DUE C OURSE BEFORE MAKING A FINAL DETERMINATION , 
FOR WHICH THE DATE WILL BE INFORMED SEPARATELY . 
 
  
 (S. S. RANA) 
 Director General (Safeguards)  
 
   
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